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AUSTIN - A three-year campaign finance investigation by Travis County prosecutors culminated Wednesday with a criminal conspiracy indictment against U.S. House Majority Leader Tom DeLay of Sugar Land, forcing the feisty Republican to temporarily step down from his leadership position.

"Let me be very clear: I have done nothing wrong," DeLay said at a Washington news conference. "I have violated no law, no regulation, no rule of the House."

The grand jury indictment alleges DeLay conspired with two of his political associates to funnel $190,000 in corporate cash illegally to seven Texas House candidates in the 2002 elections. The charge is a state felony, punishable by six months to two years in confinement and a fine of up to $10,000.

Travis County District Attorney Ronnie Earle said state law banning the use of corporate money to influence races for elective office is meant to "safeguard democracy."

But DeLay said Earle, a Democrat, is seeking "retribution" because DeLay helped the GOP take control of the Legislature and the state's congressional delegation.

"This act is a product of a coordinated, premeditated campaign of political retribution, the all-too-predictable result of a vengeful investigation led by a partisan fanatic," DeLay said.

House rules require members who are under indictment to step down. So DeLay quickly relinquished his post temporarily. U.S. Rep. Roy Blunt, R-Mo., was elected by the House Republican caucus to replace DeLay as majority leader.

Previous ethics violations

DeLay, known in Congress as "The Hammer" for his ability to wrangle votes from reluctant Congress members, has been one of the nation's most controversial politicians in recent years.

Last year, DeLay was admonished three times by the House Ethics Committee. House Republicans, anticipating an indictment of DeLay, changed caucus rules last year so he would not have to step down. But potential voter backlash caused the caucus to return to its original rules.

The indictment makes DeLay the highest-ranking member of Congress to face criminal prosecution.

Earle's investigation into whether corporate money was used illegally to influence the GOP takeover of the Texas House in 2002 originally focused on the Texas Association of Business after TAB President Bill Hammond bragged about using $2 million in corporate money to pay for issue advertising in the elections.

The business group had worked closely with the DeLay-founded Texans for a Republican Majority. The committee raised more than $600,000 in corporate money, much of which came in during fundraisers hosted by DeLay in Washington, D.C.

Texas prohibits the use of corporate or labor-union money to influence campaigns for elective office. Such money can be used for a political committee's administrative expenses.

TRMPAC Executive Director John Colyandro and Jim Ellis, director of DeLay's Americans for a Republican Majority, were indicted on a money-laundering charge last year alleging an illegal money swap with the Republican National State Elections Committee, an arm of the Republican National Committee.

In that exchange, TRMPAC gave $190,000 in corporate money to the RNC, which in turn gave $190,000 in donations from individuals to seven Texas House candidates, including Dwayne Bohac of Houston and Larry Taylor of Friendswood, who both won office.

TRMPAC could legally give corporate money to the RNC, and the RNC could legally give individual money to Texas candidates. The indictment against DeLay alleges it became illegal because Ellis gave an RNC staff member a list of candidates and how much money they were to receive in exchange for the corporate cash.

But DeLay and other Republicans said the exchange was legal because corporate money went into one RNSEC account and the donation to the Texas candidates was made from a separate bank account.

Another DeLay associate, Warren RoBold of Maryland, also was indicted last year on charges of taking illegal corporate money for TRMPAC. RoBold was a fund-raiser for TRMPAC and DeLay's ARMPAC.

Ellis and Colyandro were reindicted on the money-laundering charge earlier this month, with a conspiracy charge added. They were reindicted on conspiracy Wednesday, with DeLay's name being added to the indictment.

DeLay is almost not mentioned in the indictment as it spells out actions Colyandro and Ellis allegedly took in arranging the money swap with the RNC.

Earle said a person involved in a conspiracy does not have to take action: "Criminal conspiracy in this context means that a person with the intent that a felony be committed agree with two or more persons, like in this case that corporate contributions be made."

In DeLay's defense

But DeLay attorney Dick DeGuerin said there cannot be a criminal conspiracy if there was no crime.

"There's very little said in the indictment about Tom DeLay, and that's because he didn't do anything," DeGuerin said in Austin. "In fact, conspiracy is a stretch," the Houston attorney said. "The only way that Ronnie Earle could allege anything that might even get jurisdiction over Tom DeLay was to allege conspiracy."

Earlier this month, Earle lamented that he would have liked to have indicted DeLay on election-law violations but he lacked jurisdiction. Election law gives jurisdiction for violations to the home-county prosecutor of the person involved. DeLay lives in Fort Bend County. But Earle has jurisdiction of violations of the state penal code, such as criminal conspiracy.

DeGuerin said he wants DeLay to go to trial before the end of the year. DeGuerin noted he defended U.S. Sen. Kay Bailey Hutchison, R-Texas, when Earle indicted her in 1993 on charges of politically misusing her office. Earle dropped that prosecution as the trial began.

"That was a political prosecution, and this is a political prosecution," DeGuerin said.

The legislative majority also was key to DeLay's efforts to redraw the state's political boundaries so Republicans could capture a majority of the seats in the congressional delegation. DeLay's redistricting aspirations had been blocked in 2001 by Democrats when they controlled the House.

Six congressional seats changed from Democrat to Republican during the battle, giving the GOP a 21-11 majority in the Texas delegation.

DeLay won re-election in 2004 with 55 percent of the vote in a district he had drawn for himself. Former Democratic U.S. Rep. Nick Lampson, who lost his seat in redistricting, is challenging DeLay next year.

"This is a sad day for Congressman DeLay's constituents in the 22nd District, who deserve so much better from their elected representative — but unfortunately, it should come as no surprise," Lampson said.

Texans for Public Justice Director Craig McDonald, who filed a formal complaint with Earle against TRMPAC in 2003, said TRMPAC's financing of House candidates with corporate money undermined the integrity of the 2002 elections.

"No jury can undo the outcome of Texas' 2002 elections, but the justice system must punish those who criminally conspire to undermine democracy," McDonald said.

Three losing Democrats won a civil lawsuit against TRMPAC Treasurer Bill Ceverha earlier this year when a district judge ruled the committee had violated state law by not reporting its corporate money to the Texas Ethics Commission.

State District Judge Bob Perkins also has rejected motions by Colyandro and Ellis to throw out the money-laundering indictment against them.

Perkins also ruled against Colyandro on his challenge to indictments on accepting illegal campaign contributions.

Former U.S. Rep. Chris Bell, D-Houston, filed one of the ethics complaints against DeLay. The committee did not act on all of Bell's complaints because of the pending Travis County investigation, but Bell said the indictment means the committee should reopen the investigation.